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11 Cards in this Set
- Front
- Back
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Asset Utilization Ratios |
A group of ratios that measures the speed at which the firm is turning over or utilizing its assets. We measure inventory turnover, capital asset turnover, total asset turnover and the average time it takes to collect accounts receivable |
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Debt Utilization Ratios |
A group of ratios that indicates to what extents debt is being used and the prudence with which it is being managed. Calculations include debt to total assets, times interest earned, and fixed charge coverage |
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Debt/Equity Ratio |
A calculation of the capital structure of the firm; all liabilities to equity, debt obligations to equity or long term debt to equity |
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DuPont System of Financial Analysis |
An analysis of profitability that breaks down return on assets between the profit margins and asset turnover. The second or modified version shows how return on assets is translated into return on equity through the amount of the firm's debt |
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FIFO |
A system of writing off inventory into cost of goods sold in which the items purchased first are written off first. Also referred to as First-in First-out |
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Inventory Profits |
Profits generated as a result of an inflationary economy in which old inventory is sold at large profits because of increasing prices. This is particularly prevalent under FIFO accounting |
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LIFO |
A system of writing off inventory into cost of goods sold in which the items purchased last are written off first Last-In First-Out |
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Liquidity Ratios |
A group of ratios that allows one to measure the firm's ability to pay off short term obligations as they come due. Primary attention is directed to the current ratio and the quick ratio |
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Profitability Ratios |
A group of ratios that indicated the return on sales, total assets, an invested capital. Specifically we computer the profit margin (net income to sales ), return on assets and return on equity. |
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Replacement Costs |
The cost of replacing the existing asset base at current prices as opposed to original cost |
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Trend Analysis |
An analysis of performance that is made over a number of years to ascertain significant patterns. |
